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Decision Trees - Machine Learning

Essay by   •  April 7, 2017  •  Coursework  •  2,211 Words (9 Pages)  •  455 Views

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Marketing Model for Brand Advocacy

Customer Loyalty Assessment based on Demographics

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Model Summary

Decision Trees – CHAID Approach

Response & Predictors

Specifications

Growing Method

CHAID

Is the tree model a good predictive model for High Loyalty Customers?

Name

Type

Values

Dependent Variable

BINARY LOYALTY

Loyalty

Ordinal

0-LOW

Independent Variables

AGE, GENDER,

1-HIGH

EDUCATION, MARITAL

1:18-24

STATUS, INCOME

2:25-34

Age

Ordinal

3:35-44

4:45-54

5:55+years

Validation

None

1-MALE

Gender

Ordinal

Maximum Tree Depth

3

2-FEMALE

Minimum Cases in

25

1-High School

2- Some College

Education

Ordinal

Parent Node

3-College

4-Graduate School

Minimum Cases in

15

1-Married

Marital

Child Node

Ordinal

2-Single

Status

3-Divorced/Separated

4-

Results

Independent Variables

GENDER

Widow/Widower

Included

1:<35K

Number of Nodes

3

2:35-54.999K

3:55-74.999K

Number of Terminal

2

Income

Ordinal

4:75-94.999K

5-95-114.999K

Nodes

6:115-134.999K

7:>135K

Depth

1


Customer Loyalty Assessment based on Demographics

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  • Among predictors i.e. the demographic variables - Assessing based on the CHAID Analysis yields that only Gender is the predictor that gives a Chi Square value having statistical significance < .05 or 5% for the relation of its 2 categories with response variable 'Loyalty'. This means that the process of comparison between 2 categories of a predictor, repeated for each of the predictors merging the categories found not to have statistically significant relationship with response variable in earlier comparisons did not have any 2 categories of a predictor having a significant effect on loyalty of the customer for the brand except for Male and Female categories of Gender that show significant affect on customer loyalty.
  • As per the CHAID algorithm, the categories for Ordinal Variables are naturally defined and for continuous variables are taken in a bucket of 10 units(such as for Age).

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Customer Loyalty Assessment based on Demographics

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